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Cashing in scheme or scam
- 1. CARYN DOLLEY A RUSSIANfraudster convicted of running one of that country’s biggest pyramid schemes in the 1990s in which millions of people lost their life savings is now in charge of an operation with the same name in South Africa. The MMM scheme, founded by convict Sergey Mavrodi and known locally as MMM South Africa, entices investors by advertising that in a month they will make a 30 percent profit. This week the Communist Party of the Russian Federation sent an e-mail to the South African Communist Party (SACP) warning about the scheme. Thousands of South Africans are believed to have registered as investors in the intricate money- exchange scheme, and a consultant at MMM South Africa claimed 138 million people from 107 coun- tries had signed up. This week the scheme set off alarm bells and even affected the head of the National Consumer Commission Ebrahim Mohamed, who yesterday received an SMS from MMM offering him 30 per- cent monthly return on invest- ments. National Consumer Commis- sion spokesman Trevor Hattingh said Mohamed would refer the mat- ter to the commission’s enforce- ment and investigation division as soon as possible. “The matter needs to be assessed by the (commission) to establish the origins of MMM, and to study their business practices. “In the meantime consumers are strongly advised to not partici- pate in what could very well be an outlawed pyramid scheme where their monies could in all probabil- ity be lost,” Hattingh said. The apparent mastermind of the scheme is Mavrodi. Videos of him talking about the scheme in Russian, subtitled in English, are posted on the scheme’s South African Facebook page. In the latest video uploaded six days ago, he says: “The develop- ment in South Africa is just mar- vellous… “But nevertheless, you must keep developing the system. Don’t rest on laurels. Tell people how good and kind this system is and that everyone gets paid here.” This week the Communist Party of the Russian Federation warned about schemes it said Mavrodi was running in South Africa, India and the Philippines. In an e-mail to the SACP on Wednesday it said: “We consider it our duty to warn our fraternal peoples that this activity may result in bankrupting millions of people. We would like you to know that as a result of such swindles in Russia at least 15 million people suffered and went bankrupt.” Eight years ago The Moscow Times reported that Mavrodi, who at one stage was a Russian MP, was convicted of masterminding the initial MMM scheme. A judge found he defrauded MMM investors “by deception, betrayal and abuse of trust”. “MMM was the first and the biggest in a series of financial pyr- amids that hit Russia in the 1990s. Mavrodi was found guilty of defrauding 10 000 investors out of 110 million roubles, though in real- ity millions of people lost money in the scheme,” the article said. “Some two million to 10 million people lost their savings when the pyramid scheme folded in July 1994.” Mavrodi was sentenced to four- and-a-half years in jail. Yesterday Financial Services Board spokesman Lesego Mashigo said it was aware of the South African scheme, but because it had no mandate to investigate pyramid or Ponzi schemes, it had referred the matter to the National Con- sumer Commission. Hawks spokesman Hangwani Mulaudzi said officers knew of the original MMM scheme, but were unaware of a South African version. The MMM South Africa website describes the scheme as “a commu- nity where people help each other”. Investors could be awarded var- ious bonuses, including a referral bonus. “Inviting new members into the community is your additional contribution to its development. But nobody forces the members of the community to invite new participants,” the website said. According to the Consumer Pro- tection Act, a scheme is a pyramid scheme if participants are prima- rily compensated for recruiting others, rather than from selling any goods or services. More than 23 000 people have liked the Facebook page for MMM South Africa and about two weeks ago a message was posted on it hit- ting back at those calling it a scam. “MMM is a community of dona- tion exchange. MMM cannot be regarded as an illegal Ponzi scheme or pyramid scheme.” Weekend Argus spoke to a con- sultant on the MMM South Africa website. The consultant said Mavrodi had founded the scheme. Another consultant said there was no way for Weekend Argus to reach Mavrodi and would not give any contact details for him. The consultant eventually pro- vided his own work e-mail address. Queries about the scheme and Mavrodi, including where he was, were not answered by last night. 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The therapists are of a very high standard!!! Home away from home. Will be back if need be. Five star!!! IB1262VJD UP AND OVER: Gareth Taylor soaks up the warm spring rays and the waves while skimboarding at Clifton Beach yesterday. The weather is sunny today with a forecast maximum of 29ºC. Skimboarding makes use of a board that is smaller than a surfboard and has no fins. It is used to glide across the surface of the water. PICTURE: LEON LESTRADE Notorious fraudster targetsSA Millions of Russians left destitute IF THE MMM scheme is to be believed, it simply involves people helping each other. Yesterday a consultant for MMM South Africa said a minimum investment was R100. Once registered on the website an investor could log on and enter what is known as an online “personal office”. An investor could request to “give help” and the system would pair the investor with someone who needed “help”. Once an investor transferred funds, the investor was then given “Mavro”, the system’s internal currency, to match the amount they invested. This was then expected to grow by 30 percent a month. The MMM South Africa website said: “Participants transfer each other money directly, without intermediaries. “In fact, MMM only regulates the process and nothing more. The system completely belongs to people. “Without fools. It is a real mutual aid fund, where ordinary people help each other.” NEW VENTURE: Sergey Mavrodi, convicted years ago in Russia for running a pyramid scheme, has founded a similar operation in South Africa. PICTURE: FACEBOOK MMMjustlendingahelpinghand? Boksmust beatUKcustomstoplayonhometurf JAN CRONJE THE SPRINGBOKS may be count- ing on the magic of home-grown turf for that edge in the World Cup games, but before the grass can work its spell, it needs to pass inspection by UK customs officials. The UK Border Force places restrictions on which plants, fruit and seeds can be brought into the UK, especially from outside the European Union. Potato seeds, for example, are banned, and there are many other restrictions on what can be brought in and its quantity. South African Rugby Union (Saru) spokesman Andy Colquhoun said yesterday the union had done its homework on the legalities of transporting the turf to the UK. “We have had the idea for a long time, so we have had the opportunity to really plan for it,” he said. “As far as I understand, the turf has been cleared as all safe.” The piece of turf was unveiled at a celebrity-heavy event on Thursday at the Springbok Experi- ence Rugby Museum in Cape Town. It was grown in soil drawn from all 14 South African rugby provinces. Its seed will be taken to the UK, where it will be planted and grown in special trays to inspire players while kitting up. “This will be a visible and phys- ical reminder of what they are playing for and from where they come,” SARU chief executive Jurie Roux said this week. Bringing plants into the UK bedevilled the South African dele- gation to the Chelsea flower show earlier this year. Some plants for the the SA National Biodiversity Institute dis- play got stuck at customs, and weren’t released in time to be included in the show. They had to borrow from competitors. But the scheme worked, as they won a Sil- ver Gilt Award. See pages 6 and 31 Spring break SPORT SCARRAKEEN FORFRESH WPSTART Page 32 INSIDE PUTTINGON THEMATRIC RITZ Page 12 PEOPLE GETTING TO KNOW JACK PAROW Page 16 GARDENING,TRENDS,DECOR,PROPERTY